General Mills Earnings Call Insights: Retail Sales Growth and Cereal Business
General Mills, Inc. (NYSE:GIS) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Retail Sales Growth
Matthew Grainger – Morgan Stanley: Just to dove into the U.S. Retail sales growth a bit more. I think it’s clear that you made some progress during the first quarter and we did see some sequential improvement. But the 4% growth does seem like it benefited from a few factors like new product shipments and mix. So, as we’re thinking about modeling out that segment over the coming quarters and just how the operating environment is evolving. Just wanted to get your thoughts on whether there was an inventory benefit here in the first quarter that we should take into account and expect to normalize over the next quarter or two? And how should we think about the balance between price mix and volume across the coming quarters, should we expect to see – I assume this type of mixed benefit persisting beyond the first quarter?
Kendall J. Powell – Chairman and CEO: This is Ken. Thank you for the question, and you partly answered it. It is in fact, we did ship lots of new products over the course of the quarter, and as all of you know, it takes a while for those to move through the channel and start to get counted at retail. So, that’s part of the gap that you mentioned. You talked about mix. You also mentioned inventory and I do want to remind all of you that, first quarter a year ago our merchandising pressure was quite a bit below average and our inventories as a result our retail inventories were low. So, as we have normalized merchandising we have seen the inventories normalized behind that. So, you kind of identified some factors in the first quarter. You also, as you note, were quite pleased generally with the overall effort in the first quarter. We like the new products, we are seeing some good trends across some important categories and we are encouraged by that. Going forward, I think, we are looking for growth in low single-digits and it’s always a little bit of all three, it’s a little bit of volume, maybe a bit of price and a bit of mix. We do expect that, Matthew, to normalize here versus some of the year-over-year comps. In Q1, we expect to see that normalize as we go forward. Don, I don’t know if you would want to add anything to that?
Donal L. Mulligan – EVP and CFO: I think you captured well, as low-single-digits is still our guidance for U.S. cereal sales and there is going to be a bit of volume. Some mix, we saw that in the first quarter with cereal grain, our natural organic products drive net sales growth and they have a positive mix benefit for us and we expect (indiscernible) as the year unfolds…